TimeClock 365 gets one question from UK employers more than almost any other right now: "if the Fair Work Agency turns up, what exactly can they ask for?" The agency is new, the powers are broad on paper, and most of what's been written about it so far focuses on the law behind it rather than what an actual inspection looks like. Here's the practical version.

What the Fair Work Agency actually is

The Fair Work Agency (FWA) was established on 7 April 2026 under the Employment Rights Act 2025, bringing together enforcement powers that used to sit across several separate bodies, including HMRC's National Minimum Wage enforcement team, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority. The stated aim is a single "one-stop shop" for enforcing core employment rights — national minimum wage, statutory sick pay, and holiday pay among them — instead of workers and employers dealing with several agencies with overlapping remits.

One timing point worth flagging clearly: while the FWA itself is now operational, enforcement specifically of holiday pay is not expected to begin before April 2027. A government consultation on how that enforcement regime should work closed for responses in September 2026. That doesn't mean holiday pay compliance is optional in the meantime — the underlying legal entitlements and the six-year record-keeping duty are already in force — it means the FWA's direct enforcement teeth on holiday pay specifically are still being built.

What the FWA can actually do during an investigation

Strip away the branding and the FWA's toolkit looks like this:

1. Open an inquiry without a worker complaint

Unlike some historical enforcement routes that relied on an individual raising a grievance or tribunal claim, the FWA can open proactive investigations on its own initiative — sector sweeps, risk-based targeting, or intelligence from other government data are all plausible triggers, not just a complaint.

2. Request documents and records

The agency can require an employer to produce payroll records, contracts, rotas, and evidence of how holiday entitlement and pay were calculated. This is exactly where the new six-year record-keeping duty under the Working Time Regulations becomes operationally relevant: it's not just a filing obligation, it's the material an inspector will actually ask to see.

3. Enter and inspect premises

The FWA has powers to inspect a workplace, with a warrant required in some circumstances. This isn't limited to a desk-based document request — it can mean an inspector physically reviewing how time and attendance are recorded on-site.

4. Issue notices and pursue enforcement

Where non-compliance is found, the agency can issue notices requiring underpayments to be corrected, and can escalate to court action against employers who don't comply. Separately, failing to keep adequate holiday records under the new statutory duty is itself now a criminal offence, independent of whether an underpayment is ever proven.

What "adequate records" means in practice

Neither the legislation nor early FWA guidance gives a rigid template for what counts as adequate. In practice, employers are expected to be able to show, for each worker and going back up to six years:

  • How many days/hours of statutory holiday they accrued and when
  • How much holiday they took, and when
  • How their holiday pay rate was calculated, including for irregular hours, overtime, or commission where relevant
  • That statutory minimum entitlement (5.6 weeks) was actually honoured, not just accrued on paper

A spreadsheet updated manually by one person, with no audit trail of edits, is a weak position to be in if a request for six years of records lands on short notice. A time and attendance system that timestamps clock-ins, calculates entitlement automatically, and keeps an unaltered history is a materially stronger one. For the underlying leave rules employers need this data to reflect correctly, our guide to PTO and leave management covers entitlement and accrual mechanics in more depth.

How to prepare before an inspection, not during one

Audit what you can currently produce

Pick a handful of employees at random — including at least one on irregular hours or with variable pay — and try to reconstruct their full holiday accrual and pay history for the current leave year. If that takes more than a few minutes, or requires cross-referencing three different spreadsheets, that's the gap an inspector would find too.

Centralise the record, don't just store it

Records that exist but are scattered across payroll exports, manager emails, and paper forms are technically "kept" but practically unusable under time pressure. Centralising time, leave, and pay data in one system tied to a broader HR compliance management process makes it possible to pull a complete, defensible record on demand rather than reconstructing one.

Fix calculation methods now, not retroactively

If your current approach to holiday pay for overtime, commission, or irregular hours hasn't been reviewed against current case law, an inspection is the wrong moment to discover it's wrong. Six years of a flawed calculation method compounds the exposure.

Know who owns the response

Decide in advance who in the business would coordinate a document request or on-site visit, so it isn't improvised under time pressure the first time it happens.

FAQ

Can the Fair Work Agency inspect my business without a worker having complained?

Yes. The FWA can open proactive investigations on its own initiative, using risk-based targeting or intelligence rather than waiting for an individual complaint or tribunal claim.

Has holiday pay enforcement by the Fair Work Agency actually started yet?

Direct enforcement of holiday pay specifically is not expected to begin before April 2027; a consultation on the enforcement approach ran through September 2026. The underlying legal duty to pay correctly and keep adequate records is already in force regardless.

Do I need a warrant to be inspected by the Fair Work Agency?

A warrant is required in some circumstances for the FWA to enter premises, but the agency also has broad powers to request documents and information without necessarily needing to attend on-site first.

What happens if we can't produce adequate holiday records when asked?

Failing to keep adequate records under the Working Time Regulations duty introduced from 6 April 2026 is a criminal offence in its own right, separate from any underpayment finding. Poor records can also make it harder to defend an underpayment allegation, since the burden of demonstrating compliance sits with the employer.

Does a small business need to worry about this as much as a large employer?

The record-keeping duty and the FWA's powers apply regardless of size. Smaller employers are sometimes at greater practical risk simply because record-keeping tends to be more manual and less centralised.

What's the single most useful thing to fix before any inspection risk becomes real?

Move from scattered manual records to a system that automatically timestamps and retains time, leave, and pay data. That single change addresses most of what an inspector would actually ask to see.

This article is general information for UK employers and does not constitute legal advice. For guidance on your specific circumstances, consult ACAS or a qualified employment solicitor.